An Oracle Contract is a mechanism that connects smart contracts to real-world data. Smart contracts execute automatically based on predefined conditions. However, they often need external information, such as market prices or weather data, to function correctly.An oracle acts as a bridge, fetching and supplying this external data to the smart contract. This allows it to execute transactions or create outcomes based on real-world events. Oracles can be centralized or decentralized, with decentralized oracles providing greater security by reducing reliance on a single source of information.The data provided by oracles can come from various sources, including APIs, websites, or even physical sensors. For example, a smart contract governing a crop insurance policy might rely on an oracle to provide rainfall levels.Using an oracle enhances the capability of smart contracts, but it also introduces challenges, particularly around data accuracy and security. Properly designed oracle systems can greatly expand the use cases for blockchains by enabling interaction with off-chain data.